Opening Pandora's Box

• Drew Beam

  

• Anthony Pidgeon

  

  Oakland attorney Lee Sanders accuses Big Tobacco of subverting the law with its secret diversion plan.

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In these moments of intense political philosophizing, when his eyes begin to flash almost menacingly, it seems certain that Sanders believes he was put on this Earth to fight the good fight, to unerringly revere every letter of the law. Former President Richard Nixon, whom Sanders tried to eject from office while a Common Cause organizer during Watergate, is the poster child of all that Sanders reviles about a corrupted republic. When Sanders witnesses what he considers a subversion of democracy, he becomes personally insulted.

It is precisely this combination of righteousness and faith in civic virtue that prompted the 59-year-old lawyer to sue the state of California five years ago when he became convinced that something untoward was happening with the way state lawmakers were spending money from a special, voter-approved tax on cigarettes.

When he filed his suit, Sanders did not know he would stumble upon damning evidence of a secret tobacco industry plan to subvert the law and protect its lucrative California market.

The scheme was born in 1988, when public health and anti-smoking groups -- frustrated that they had been unable to get any sort of cigarette tax through the state Legislature -- went straight to the voters with Proposition 99, an initiative to raise the price of a pack of cigarettes by 25 cents. The tax was expected to generate almost $1.5 billion in its first year, and the money would be earmarked for various things, including smoking-related medical care and tobacco research. A substantial chunk of the money would go toward a public education campaign. Voters approved Prop. 99, and the state of California was poised, for the first time, to launch a well-funded advertising blitz aimed at persuading people not to smoke.

Terrified that taxpayer money was about to be spent on an aggressive advertising campaign that would drive away its customers, the tobacco industry launched a secret plan -- dubbed "Project California" in one internal tobacco industry memo -- to gut the public education program. The tobacco industry set out to ensure that as much of the money as possible would be diverted from the education campaign to medical programs that, while commendable, posed no threat to the industry's bottom line.

For more than five years, with the help of Govs. George Deukmejian and Pete Wilson and Assembly Speaker Willie Brown, the industry's scheme was partially successful. Compliant state lawmakers took about $140 million in cigarette tax money that should have gone to the anti-smoking campaign, and diverted it to other uses.

Sanders and many anti-smoking activists say the diversions were illegal, and so far one court has agreed in part. Sanders' lawsuit is still pending, and he argues that the diversions were a corruption of public will, driven by tobacco money and duplicitous behind-the-scenes maneuvering. To this day, Sanders is still trying to make the state put the money back into anti-smoking education, arguing that state politicians, fed on tobacco campaign contributions, violated the California Constitution when they rerouted the tens of millions of dollars.

In the course of the lawsuit, Sanders has managed to amass some compelling evidence for his case, much in the form of once-secret industry memos. With great stealth and political savvy, the documents show, the tobacco industry was able to strike alliances, dole out campaign money, pressure lawmakers, and partially undo the will of the voters, all in an effort to keep people smoking.

Big Tobacco's political fortunes have plummeted dramatically in the 11 years since California voters approved Prop. 99. Back then, the public had yet to see secret industry documents on the health hazards of smoking. There had been no incriminating congressional hearings aired on national television, in which the leaders of the nation's largest tobacco firms made fools of themselves by swearing under oath, one by one, that they did not believe nicotine was addictive.

The tobacco industry had lost no major lawsuits filed by ill smokers or the families of dead ones. There were few signs that, within a decade, tobacco would become Public Health Enemy No. 1, with state and federal governments filing multibillion-dollar lawsuits against the industry to recover medical costs. Or that the tobacco wars would spawn a popular movie like the recently released The Insider.

Back then, politicians still accepted hefty tobacco campaign contributions without apology, and the political clout of the industry's lobbyists ranked up there with the National Rifle Association.

By virtue of its size, California was one of tobacco's largest and most important markets - a "bellwether state," as tobacco industry executives described it in a memo. And the industry had been quite successful at protecting its interests in the Golden State.

In the 21 years before Prop. 99 was put to the voters, more than 30 bills were introduced in the state Legislature to increase tobacco taxes, and every one was shot down. By 1986, every state in the union had increased its tobacco taxes at least once since the 1960s -- except Virginia and California.